Olive Garden Owner Gets Shareholder Suit Tossed

Olive Garden Owner Gets Shareholder Suit Tossed - 8/12/2009

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2009 News and Press Releases

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

DISMISSAL NEWS:

Olive Garden Owner Gets Shareholder Suit Tossed
Christine Caulfield

Securities Law 360. August 12, 2009
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EXCERPT: Darden Restaurants Inc., owner of the Red Lobster and Olive Garden franchises, has won the dismissal of a putative securities class action that accused the company and its top two executives of misleading investors to inflate the price of the company's stock. The complaint against Darden, which owns and operates more than 1,700 restaurants in the U.S. and Canada, failed to establish either fraud or the requisite intent, U.S. District Judge Mary Scriven of the Middle District of Florida ruled on Tuesday. The suit was first filed in March 2008 on behalf of investors who bought Darden stock between June and December 2007. It named Darden, CEO Clarence Otis Jr. and Chief Financial Officer C. Bradford Richmond as defendants. The suit alleged a scheme to mislead the public about Darden's financial health to enable insiders to sell $18.5 million in artificially inflated company stock, to the detriment of investors. The complaint accused the company of releasing materially false and misleading statements on its finances and future prospects in 2007 and failing to disclose the fact that its core restaurants were underperforming, that it was facing rising food costs and that same-store sales were declining. “These material misstatements and omissions had the cause and effect of creating in the market an unrealistically positive assessment of Darden and its business, prospects and operations, thus causing the company's common stock to be overvalued and artificially inflated at all relevant times,” the suit said. The plaintiffs further alleged that company insiders sold more than 427,000 shares of their personally held common stock while the shares were inflated. The plaintiffs said the truth was not revealed until Dec. 18, 2007, when Darden announced its financial results for the fiscal second quarter of 2008 and admitted that it was unable to meet earnings growth expectations because of a “difficult consumer environment.”

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